Stanford President: Entrepreneurs Should Wait To Become CEO

It seems that every entrepreneur in Silicon Valley wants to be CEO of the company they founded, because they feel it's necessary to have total control over its direction.

John Hennessy, president of Stanford University, told Bloomberg that founders should wait to become CEO, and instead work with someone more experienced.

Hennessy, a former entrepreneur who serves on the board of Google and Cisco Systems, said: "I've told a lot of young founders that I've talked to, 'You're not ready to be the CEO. I know you're the visionary — go head the engineering team, go become the chief technical officer. Learn a little more before you become the CEO.' Because you've got to learn skills that you don't have."

He told Bloomberg that young entrepreneurs are inexperienced, for example, in hiring the right salespeople, negotiating, and determining whether or not a deal is worth making.

"I mean, yeah you can do all the math, but in the end you got to have some gut instinct," he said, implying that such instinct only comes with years of experience.

In his book "The Founder's Dilemmas," Noam Wasserman points to data that suggests founder-CEOs may even be setting themselves up for being fired:

Entrepreneurial strengths often become Achilles heels: Early on, a founder's passion for the idea, confidence in its prospects and in his or her own abilities, and attachment to the startup can be the founder's greatest strengths. As the startup evolves, though, each of those strengths can become a major liability as the founder refuses to adjust the idea, underestimates the need for additional resources or skills, and makes decisions that harm the startup.

As a successful startup grows from outside investors, power shifts from the founder-CEO to the board, which may decide they want a more business-savvy, less egotistical executive. Wasserman cites a study that shows more than 50% of founders are replaced as CEOs by the third round of financing.

So, if you want to start a business, you may be better off remaining the visionary and letting an experienced CEO help you launch your company.

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